Two Canadian pipeline proposals have put the future operation of the 72-year-old crude oil pipeline connecting Portland and Montreal in jeopardy, according to industry, financial and environmental sources in Canada.

Many Mainers are familiar with the ongoing battles between the Portland-Montreal Pipe Line and environmental activists, who suspect the corridor soon will be used to pump crude from the Alberta oil-sands across the state. A less visible but more realistic threat is coming from two Canadian pipeline proposals that are responding to changes in global petroleum markets. These changes could greatly reduce the need for the overseas oil that now moves through Maine to Montreal and supports 100 percent of the Portland pipeline’s business.

Canadian experts reached by the Maine Sunday Telegram agree that development of either of these pipelines, coupled with a new plan to move oil by rail to a refinery in Montreal, eventually could force the Portland pipeline to shut down.

At stake for Maine are 35 well-paying jobs and $3.5 million a year in spending tied to tanker docking and other services. The company also pays $1 million a year in local property taxes and $2 million in state income taxes.

Seeking a reaction from the company, the newspaper requested an interview with Larry Wilson, president and chief executive officer of the Portland-Montreal Pipe Line. Wilson referred the matter to a public relations spokesman, and later responded to a handful of email questions.

Wilson didn’t directly answer specific questions about the impact of the Canadian pipelines and reversing the flow of the Portland pipeline to pump crude from Alberta. He did note that energy transportation markets are dynamic and constantly evolving. He said the company closely monitors demand and carries out strategies to position it for success.


“PMPL has every reason to be optimistic about our long term future and our ability to continue providing excellent careers and making significant contributions to our communities, while providing vitally important energy transportation needs,” he said.

The most far-reaching threat to Portland came last month from TransCanada Corp.’s proposal to build a 2,734-mile pipeline to connect oil fields in Alberta with the Irving Oil refinery in Saint John, New Brunswick. The Energy East pipeline would bypass Maine to the north and give Canada a path to export its enormous oil reserves without crossing an international border. Energy East could move more than 1 million barrels of oil a day in 2018.

The more immediate threat is a plan by Enbridge Inc. to repurpose an existing pipeline and pump less-expensive oil from western Canada to refineries in Ontario and Quebec. The first phase of this project, called the Line 9 reversal, already has been approved by federal regulators and is in operation. A final hearing on the second phase is set for early October.

Both these proposals face opposition in Canada. Environmental groups charge that these pipelines will be prone to leaks, pointing to the 2010 Enbridge spill in Michigan. They also say that further oil-sands development will accelerate the pace of climate change. Energy East also faces special challenges in Quebec, where political separatist leanings and the Lac-Megantic railroad disaster may make any oil transport project a hard sell.

But both projects also are being propelled by factors that may not be immediately evident to Americans. They boil down to a sense of self-determination in a vast nation with a small population but abundant energy resources.



The Line 9 reversal is seen as a chance to save the Suncor Energy oil refinery in Montreal, the last of six refineries that once operated in the city. Crude from western Canada is now 20 percent less expensive than overseas supplies, business groups say, and cheaper oil is essential to the survival of Suncor-Montreal and another refinery near Quebec City.

Energy East advocates, who include some of Canada’s leading politicians and corporations, are touting the TransCanada Corp. project as a historic exercise in nation building.

Last week, TransCanada released a study that estimated the pipeline would generate $35 billion in spending and create 10,000 construction jobs across Canada.

Canadian leaders have been frustrated by efforts to move oil south across the United States through the Keystone XL pipeline. They have watched pipeline plans across western Canada for Asian markets fail or stall. Energy East is a must-do project, they say, if Canada is to exploit its energy and economic potential.

“Canadian oil is essentially landlocked to one customer, the United States,” said John Herron, president of the Atlantica Centre for Energy. “The effect is, this Canadian commodity is measurably discounted, because it can’t be sold on the world market today.”

New oil reserves in the United States and shrinking demand mean that Canada needs to sell more crude overseas, Herron said, west to China and east to India and Europe. The Energy East pipeline, Herron said, also will pass refineries in Ontario and Quebec, allowing Canada to receive the added value of exporting refined products.


Line 9, meanwhile, has a leg up because it’s an existing pipeline. In approving the first phase, Canada’s National Energy Board endorsed the idea of developing underused capacity.

This precedent worries Maine environmental activists. They say that if Line 9 is reversed all the way from Sarnia, Ontario, to Montreal, the Portland pipeline also will seek to reverse its flow and complete the link to the sea, pumping oil-sands crude across Maine for export through South Portland. They express similar fears about a potential connection to Energy East.

These fears helped launch a grass-roots campaign in South Portland this summer aimed at blocking construction of vapor combustion units that the Portland pipeline would need to prepare oil-sands crude for export on tankers. Voters will decide in November whether to make changes to the city’s waterfront ordinance that effectively would ban the facility.


But that vote may not be a deciding factor. Two leading Canadian experts say that while the Portland reversal might make business sense for its owners, shippers aren’t likely to sign up. The ongoing fight over Keystone XL has taught them a lesson.

“No one is considering reversing the flow of that pipeline to move oil from Alberta, because the opposition in New England is too strong,” said Pierre-Olivier Pineau, a professor and energy policy specialist at the HEC business school in Montreal.


Pineau’s observation is echoed by Steven Paget, an investment analyst with FirstEnergy Capital Corp. in Calgary.

“After five years and counting of delays on Keystone XL, there doesn’t seem to be any desire to sign up for a similar protest on another pipeline,” Paget said.

There also are business reasons why the two Canadian pipelines aren’t likely to feed crude oil through Maine.

Line 9 would be expanded to a capacity of 300,000 barrels a day. The Suncor refinery can refine 137,000 barrels a day. The Valero refinery across the St. Lawrence River from Quebec City is rated at 235,000 barrrels a day. It would be supplied by ships from a terminal in Montreal.

The combined refining capacity of these two plants exceeds that of the pipeline, according to Graham White, an Enbridge spokesman, so there’s not enough crude to export overseas.

“There are no plans or proposals to ship crude past Montreal,” he said.


Reversing the Line 9 flow eastward also makes it impossible for the Portland pipeline to reach a refinery in Nanticoke, Ontario. That unit is owned by Imperial Oil, an Exxon-Mobil subsidiary that is the majority owner of the Portland pipeline.

Asked about the potential for Energy East to feed the Portland-Montreal line, a spokesman for TransCanada said there are no plans to do that.

“The Energy East pipeline will connect with the refiners in Quebec and New Brunswick, and therefore enable them to cut their dependence on foreign oil, as they currently import 86 percent of their needs,” Philippe Cannon said.

He also said new marine terminals in Quebec and Saint John would handle exports.

Most notably, TransCanada has formed a partnership with Irving Oil to build a deepwater marine terminal near Irving’s existing Canaport complex. Upgrades at Irving’s refinery would allow it to refine western crude for export out of Saint John.

Pineau said it’s his view that if either Energy East or the full Line 9 reversal becomes real, the Portland-Montreal Pipe Line will no longer be profitable.


“Oil will flow east to Montreal, and we won’t need the Portland line anymore,” he said.


The Portland pipeline already has seen its utility fade in recent years. Cheaper crude from Canada and the Bakken oil fields in North Dakota has slowly displaced imports from the North Sea and other regions.

The Portland-Montreal Pipe Line actually has two parallel lines. An 18-inch diameter line built to handle 192,000 barrels a day is currently out of service, for lack of demand. A newer, 24-inch line has a capacity of 410,000 barrels a day. Wilson declined to say how much oil currently is being pumped to Montreal. In public material released earlier this year, the company said it’s moving an average of 150,000 barrels of crude per day.

Last month, the owner of the Montreal refinery made an announcement that was more bad news for Portland.

Suncor Energy plans to begin sending crude by rail to its Montreal refinery later this year. The company will supply roughly 10 percent of its refinery needs by rail, to start. Most of the crude that now feeds the refinery is pumped from South Portland, so the pipeline would lose that business.


Suncor owns a 23 percent interest in the Portland pipeline, but it’s also a major developer in the Alberta oil-sands. Suncor supports both Energy East and Line 9, according to Sneh Seetal, a spokeswoman for Suncor in Calgary, but it can’t wait any longer to get western oil to Montreal.

“Rail provides an opportunity for integration between our Montreal refinery and our western operations,” she said.


One hope for the Portland-Montreal Pipe Line lies with uncertainty about the ability to build a new pipeline across Quebec.

On one hand, business interests see western crude as essential to the survival of the province’s two remaining refineries. There’s also a realization within the separatist Parti Quebecois government of Premier Pauline Marois that the province needs these oil refineries to become energy self-sufficient.

On the other hand, the massive explosion in Lac-Megantic this summer of a train carrying oil cars has set off a general public backlash against petroleum transport.


That unease is being exploited by provincial environmental groups such as Equiterre. It has begun informational tours and town hall meetings aimed at building opposition for the Energy East line, underscoring that much of the oil will pass through Quebec, just like the train through Lac-Megantic.

“People are saying, ‘What’s in it for us?”‘ said Steven Guilbeault, Equiterre’s senior director.

National environmental groups, such as Environmental Defence-Canada, also are fighting both Energy East and Line 9. Adam Scott, the group’s climate and energy program manager, said promoting these projects as a national imperative for Canada’s economic destiny is just “propaganda” coming from the oil industry and big banks.

“Opposition to both these projects in Canada is quite large,” he said.

Scott said he feels confident that both projects are being watched closely by the owners of the Portland-Montreal Pipe Line, and despite denials from the industry, he expects the line to seek permits to reverse its flow to move oil west to east.

“One thing’s for sure,” Scott said. “The Portland pipeline won’t be profitable in its curent configuration. So either shut it down or reverse it. That’s the only two choices.” 

Tux Turkel can be contacted at 791-6462 or 

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